Qualifying Long Term Agreements

Section 20 of the Landlord and Tenant Act 1985 places a limitation on the recovery of service charges. So far as qualifying long term agreements are concerned, if a landlord wants to recover more than £100 from any leaseholder in any “accounting period” then the consultation requirements must either:-

 

  1. Be complied with in relation to the agreement; or
  2. Be dispensed with by the Tribunal.

 

What is a Qualifying Long Term Agreement?

A qualifying long term agreement (commonly referred to as a QLTA) means an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than 12 months.

 

What are the consequences of any failure to consult or obtain dispensation?

If consultation is not undertaken, or dispensation obtained from the First Tier Tribunal, then the contributions recoverable from leaseholders by the service charge are capped at £100 per leaseholder per accounting period.

It is important therefore to recognise when agreements are qualifying long term agreements and to either undertake consultation in accordance with the consultation requirements, or alternatively obtain dispensation from the Tribunal.